In the matter of N. Thirupathiswami Chetti Official Assignee, Madras v. N. Venkayya Minor by Guardian K. T. Seshaiah
1964-01-08
VENKATARAMAN
body1964
DigiLaw.ai
Judgement ORDER:- Sri M.P. Sundararajan at this stage raised the contention that at the most only a declaration can be given in an application under S. 7 of the Presidency Towns Insolvency Act about the binding nature of the debts on the son's share but the Official Assignee will not have a power of sale because some of the creditors of the father had already attached the share of the son in proceedings in execution of the decrees obtained by them against the father or against the father and son. He has furnished a list dated 12-12-1963 showing the particulars of 8 such cases. Items 1 to 5 and 7 therein are said to be cases where the attachment had taken place prior to the presentation of the present application under S. 7. Items 6 and 8 are cases where the attachment was effected after the presentation of the present application. The contention of the learned counsel is that there are Bench decisions of this court which have held that on such attachment by an execution creditor or the son's share, the father's power of sale is at an end. The decisions he referred to are Gopalakrishnayya v. Gopalan, ILR 51 Mad 342 : (AIR 1928 Mad 479(1) : Official Receiver, East Godavari v. Imperial Bank of India, ILR 59 Mad 296 : (AIR 1936 Mad 193) and Arunachala Chettiar v. Sabaratnam Chettiar, ILR (1939) Mad 585 : ( AIR 1939 Mad 572 ). But as has been explained by Venkataramana Rao, J. and Somayya, J. in Rayanji v. Janakiramayya, 1942-1 Mad LJ 318 : AIR 1942 Mad 330 the cases cited by Sri Sundararajan were cases where the competition was only between the attaching execution creditor and the Official Receiver representing the general body of creditors, and all that the cases cited by Sri Sundararajan must be held to have decided was that where the execution creditor attaches the son's share in execution of a decree obtained against the father or against the son or against the father and the son, that attachment will prevail over the Official Receiver when he wants to attach the same son's share for the payment of the debts of the father not tainted with illegality or immorality, and that subject to the right of precedence of the attaching execution creditor, the Official Receiver's right will still be available.
The learned Judges Venkataramana Rao and Somayya, JJ. followed the prior decision of Varadachariar, J. and Gentle, J. in Diravyam v. Veeranan, ILR (1939) Mad 853 : ( AIR 1939 Mad 702 ) where this distinction has been made. 2. In ILR (1939) Mad 853 : ( AIR 1939 Mad 702 ) there was a contract of sale by the members of the joint family. Then there was an attachment by an execution creditor and later there was insolvency. In the insolvency proceedings the Official Receiver executed a sale deed in performance of the contract of sale. It was urged that the sale was invalid, the contention being that with the attachment by the execution creditor the Official Receiver's power of sale was at an end and the cases relied on by Sri Sundarajan, except the case in ILR (1939) Mad 585 : ( AIR 1939 Mad 572 ) which was decided later, were relied on. Varadachariar, J. expressed the opinion that the right of the creditor of the father to seize the son's share was a right to which the coparcenery right of the son was subject and therefore the right of the creditor of the father to seize the son's share could not be defeated even by attachment of the son's share by the execution creditor of the son. He emphasised that the effect of attachment is that embodied in S. 64 C.P.C. by which only the son whose share was being attached would be precluded from effecting a private sale of that share, and even there any private sale effected by the son after such attachment would not be altogether void but would be void only in respect of the attachment effected by the execution creditor.
Varadachariar, J. pointed out that the creditor of the father is entitled under Hindu law to enforce the pious obligation of the son for the father's debt and cannot be said to derive his right through the son and would not therefore be subject to the disability imposed on the son under S. 64 C.P.C. However Varadachariar, J. did not think it necessary to refer this point for the decision of a Full Bench and was content to assume that the right of the father and of the father's creditor to seize the son's share for the satisfaction of the father's debt would be subject to the liability under S. 64 C.P.C. to the same extent as the son would be liable, But even so, Varadachariar, J. pointed out that S. 64 C.P.C. would not altogether destroy the son's right to alienate his share and equally would not destroy the power of the father of the father's creditor to sell the son's share, but would only make that right subordinate to the right of the attaching creditor under S. 64 C.P.C. In that particular case, he proceeded to point out further that the attaching creditor could only attach the son's share with the liability which it had at the time of the attachment and the son's share was under the liability of the earlier contract of sale and in that view of the matter it was held that the attaching creditor would be bound by the earlier contract of sale. 3. In 1942-1 Mad LJ 318 : ( AIR 1942 Mad 330 ) Venkataramana Rao, J. and Somayya, J. followed the above decision of Varadachariar, J. and Gentle, J. In 1942-1 Mad LJ 318 : ( AIR 1942 Mad 330 ) an execution creditor, namely, the 16th defendant, had made an attachment of the son's share but had not yet brought the property to sale. It was held that in view of that circumstance the Official Receiver was entitled to sell the son's share though the purchaser from the Official Receiver would have to give way to the necessary extent to the claims of the attaching creditor, namely, the 16th defendant.
It was held that in view of that circumstance the Official Receiver was entitled to sell the son's share though the purchaser from the Official Receiver would have to give way to the necessary extent to the claims of the attaching creditor, namely, the 16th defendant. Somayya, J. pointed out pertinently that even after the claims of the attaching creditor are satisfied there may be a large surplus left and it would be wrong to hold that the Official Receiver cannot lay any claim even to that surplus. For instance, the son's share may be worth Rs. 10000 and the attachment by the son's creditor may be only for Rs. 1000. Somayya, J. pointed out that the balance must be available to the Official Receiver It is interesting to note that Somayya, J. was a party to the decision in ILR (1939) Mad 585 : ( AIR 1939 Mad 572 ). 4. The explanation by Varadachariar and Gentle, JJ. and Venkataramana Rao and Somayya, JJ. of the decisions in ILR 51 Mad 342 : (AIR 1928 Mad 479 (1)) : ILR 59 Mad 296 : (AIR 1936 Mad 193) and ILR (1939) Mad 585; ( AIR 1939 Mad 572 ) was adopted by the Nagpur High Court in Lakshminarayan v. Dinkar, ILR (1943) Nag 390 : (AIR 1943 Nag 101) and by the Kerala High Court in Ramachandra v. Kannivelan, ILR (1958) Ker 1039 : (AIR 1939 Ker 141) and I respectfully adopt that explanation, particularly as it seems to me to be based on sound reasoning. 5. If this were all, it would mean that in the present case the Official Assignee must give precedence to the rights of the eight creditors, who have effected attachment of the son's share or at least to the claims of the creditors 1 to 5 and 7 in the list submitted by Mr. Sundararajan, where the attachment had been effected before the presentation of the present application under S. 7. But there is another principle which comes into play in the present case, according to which the attaching creditors are not entitled to any such precedence over the Official Assignee.
Sundararajan, where the attachment had been effected before the presentation of the present application under S. 7. But there is another principle which comes into play in the present case, according to which the attaching creditors are not entitled to any such precedence over the Official Assignee. The principle is that the purchaser of the share of the son in a joint Hindu family has only an equity to step into the shoes of the son and enforce partition but when such partition comes to be effected, provision has first to be made for the discharge of the just debts of the father, that is, debts not tainted with illegality and immorality. For instance, if the properties of the father and the son are worth say Rs. 50000 and the father has got debts to the extent of Rs. 20000 not tainted with illegality and immorality, provision has to be made for the discharge of this debt of Rs. 20000 and only the remainder of Rupees 30000 will be available for division between the father and the son. This position never seems to have been in doubt and was expressly laid down in Venku Reddi v. Venku Reddi, ILR 50 Mad 535 : (AIR 1927 Mad 471) (FB). Defendants 5 and 6 in that case were purchasers of the share of the second defendant, sun of the first defendant, and it was held that the purchaser was subject to the same liability as the son to satisfy the debts of the father. It was observed : "The purchaser of an undivided share of a Hindu coparcener, it has been held, gets only an equity to enforce partition and takes the share when partitioned, subject to all the liabilities on it in the hands of his vendor. Clearly, therefore, defendants 5 and 6 can get the second defendant's share only subject to the liability for the debt, if it is subject to that liability in the second defendant's hands." Reference may also be made to the decision of the Full Bench of the Allahabad High Court in Bankeylal v. Durga Prasad, ILR 53 All 868 : (AIR 1931 All 512 (FB)) particularly the decision of Mukherji, J. who quotes the relevant texts, and the decision of the Supreme Court in Jakati v. Borkar, 1959-2 Mad LJ (SC) 21 : ( AIR 1959 SC 282 ). This.
This. right is also recognised in the very judgments of Ramesam, J. and Madhavan Nair, J. in In the matter of Balusami Ayyar, ILR 51 Mad 417 : ( AIR 1928 Mad 735 ) (FB) a decision relied on by Sri Sundararajan at an earlier stage. This is also recognised in Thimmiah v. Official Receiver, Bellary. 1939-1 Mad LJ 158 : ( AIR 1939 Mad 276 ) another decision cited by Sri Sundararajan himself. 6. If I understood Sri Sundararajan aright, he did not, and indeed he could not, dispute the position that in a partition suit, provision has to be made for the father's just debts before the partition can be effected and that the purchaser of the son's share will be subject to this liability to satisfy the father's debts first before he can get the son's share. But he submitted that such adjustment could not be effected in a proceeding under S. 7 of the Presidency Towns Insolvency Act But it is precisely this contention which I negatived in an earlier portion of the judgment following the Bench decision in Ramachandra Iyer v. Official Assignee, Madras, ILR 54 Mad 739 : (AIR 1931 Mad 317) which held that such an adjustment and provision for the father's debt could be made even in a proceeding under S. 7 of the Presidency Towns Insolvency Act irrespective of the pendency of the, partition suit. It goes without saying that it would be vain to give merely a declaration that the son's share is liable for particular debts unless that right can be enforced by sale. This is recognised by Curgenven, J. in ILR 54 Mad 739 at p. 750 : (AIR 1931 Mad 317 at p. 321) where he says that in his opinion the insolvency court must have the consequential power of directing the sale of the minor's property, and by Bashyam Aiyangar, J. in the same decision at page 756 (of ILR Mad) : (at p. 323 of AIR). 7.
7. Finally it may also be mentioned that the decisions in ILR 51 Mad 342 : (AIR 1928 Mad 479(1)) : ILR 59 Mad 296 : (AIR 1936 Mad 193) : ILR (1939) Mad 585 : ( AIR 1939 Mad 572 ) and 1939-1 Mad LJ 158 : ( AIR 1939 Mad 276 ) were not cases where there was a comprehensive suit for partition or a petition under S. 7 of the Presidency Towns Insolvency Act or S. 4 of the Provincial Insolvency Act, and they can be distinguished on that ground. 8. The position therefore is that a provision will have to be made first to satisfy the debts which have now been declared to be binding on the minor before a partition can be effected and only in what remains the creditors who have attached the son's share can lay their claims. The Official Assignee can sell the son's share too for this purpose.